Jalan Besar property sold for almost $10m below indicative price

2 Cavan Road, a 20,100 square feet Jalan Besar property, was bought by a unit of Kheng Leong Company for $38.71 million. When the Jalan Besar property was put up for sale in March, it had an indicative price of $47.4 million.

The buyer of the Jalan Besar property plans to turn it into apartments, with commercial units on the ground floor.

Image credit: CBRE

2 Cavan, off Lavender Street, was launched for sale by public tender in March 2019 and was jointly marketed by CBRE and HRL Properties. The freehold redevelopment site currently accommodates a part-single-part-three-storey light industrial-cum-warehouse building which is understood to have been built in the 1950’s.

Under the 2014 Master Plan, the the Jalan Besar property is zoned “residential with commercial at 1st storey” with a plot ratio of 3.0. The marketing agents said when the property was launched for sale that, as the current gross floor area of the buildings are under-utilised, the successful buyer can consider maximizing the gross floor area of 2 Cavan Road to approximately 60,301 square feet upon redevelopment.

Subject to relevant authorities’ approval, new extensions within the conservation guidelines of up to a six-storey building height are permitted, of which relevant development charges will be applicable.

The Jalan Besar property belongs to a single owner, so approval from strata titles board is not be required. Assuming the existing building at 2 Cavan Road is conserved and incorporated into the proposed redevelopment, the development charge for this site will be $18.9 million. After factoring in the development charge, the guide price for the site worked out to $1,100 per square foot per plot ratio.

Mr Low Choon Sin, Manager, Capital Markets, CBRE said when launching the property for sale: “We expect keen interest from mid-sized developers and contractors due to the palatable quantum as well as the potential to redevelop both sites into a boutique mixed-use development. Such mixed-use developments typically have a strong appeal to home buyers due to the freehold tenure in a city fringe location. The short walking distance to both Bendemeer and Lavender MRT stations are strong plus factors.”

Jalan Besar is a one-way road in Singapore, connecting Kallang and Rochor. Theside of Jalan Besar between Lavender Street and Syed Alwi Road was once swamp land. Flying ducks, snipe, fish, mud lobsters and multi-coloured snakes thrived there. The area was slowly reclaimed by dumping refuse. In 1923, the New World Amusement Park located off Jalan Besar was opened by the enterprising sons of Ong Sam Leong (after whom nearby Sam Leong Road is named), Peng Hock and Boon Tat.

In recent years, the Lavender/Jalan Besar area has undergone a transformation into a vibrant lifestyle location. With high-rise residential and commercial developments sprouting up, the area in which the two freehold redevelopment sites are in provides a diverse range of entertainment, cultural and lifestyle attractions including hipster cafes and bars that attract high footfall and immediate catchment.

Prominent landmarks include the newly completed ARC 380, City Square Mall, Jalan Besar Sports Centre, City Square Residences and the upcoming Sturdee Residences. The subject property is also well-connected to the key precincts in Singapore, such as the CBD which is only a 10-minute drive or train ride away.

Mr Paul Ho, Chief Mortgage Consultant at iCompareLoan, said that despite the property curbs introduced by the Government last year, Singapore is still an attractive residential market for investors.

Although the property market exuberance has been curbed to some extent with the property cooling measures introduced last year, Singapore as a property market investment destination still remains among the top – shoulder to shoulder – with other cities in the world like London, New York, Shanghai and Sydney.

“We have to be mindful that there is a lot of excess capital fluidity here and at 1.9 – 2 percent, Singapore has one of the lowest interest rates for home loans in the region,” he added.

The biggest gainers following the new property cooling measures is likely be owners of strata portfolio of offices and shophouses approved for commercial use. The property cooling measures affected almost all categories of buyers and is predicted to achieve its intended objectives of cooling demand and moderating price growth.

One report said investors looking for alternatives to park their money in the wake of property cooling measures, would divert their attention to the offices and shophouses markets as they are not subjected to this round of purchase or sales restrictions/encumbrances.

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